Government energy efficiency plans need clearer vision

News that the UK’s energy efficiency plans are missing targets casts further serious doubt on the Government’s strategic eco vision.

House image with energy efficiency blog post
Household energy efficiency needs much stronger support to succeed

The Department of Energy and Climate Change has just advised that eight out of ten major projects are currently failing to meet required goals, including the household energy efficiency promotion, which scores lowest in the department’s ranking.

This comes after a steady stream of announcements that on the face of it appear to move the Conservative administration away from strong proactive support for green policies. These announcements include the early removal of subsidies for onshore wind energy generation and the £40 million cut to the DECC budget.

There is also widespread concern that the Green Deal is failing to attract support and that the ECO scheme, where energy companies are tasked with providing energy-saving measures for households, has been effectively neutered.

It’s been clear to us for some time that the various strands of national policy addressing energy efficiency and emissions are more than a little chaotic and piecemeal. A coherent and fully backed strategy is needed that supports households, businesses and organisations to quickly, permanently cut energy use and water consumption.

Massive reductions in energy use can be achieved through adoption of solutions like LED lighting, smart lighting and heating controls, smart heat pumps and water-efficient products.

Renewables boost

At the same time, the government energy statistics present a very positive picture for renewable and sustainable energy generation. Renewables’ share of electricity generation (hydro, wind and other renewables) increased from 19.6 per cent in 2014 Q1 to a record level of 22.3 per cent in the same period this year, with wind generation up 5.3 per cent.

Renewable electricity generation was a record 21.1 TWh in the first quarter of 2015, an increase of 15 per cent on the same period a year earlier.

In this context, the announcement that the Government wants to partially privatise the Green Investment Bank (GIB) has raised further concerns that the laissez-faire approach will lead to less effective or a reduction in cash flowing to green energy projects.

Senior Tories as well as opposition MPs such as the Green Party’s Caroline Lucas have questioned the move by Business Secretary Sajid Javid to see how best to attract private investors into the bank.

Asset sale

The GIB has backed around 50 projects since it was set up in 2012 and invested more than £2 billion of public funds.

The exploration of ways to sell off a portion of the bank is in keeping with the Government’s fiscal strategy to sell off assets to reduce the deficit and the sale of up to 70 per cent could raise well over £1 billion.

The GIB has just turned financially positive for the first time, announcing £100,000 pre-tax profit from investments that also attracted co-investment from private equity investors, sovereign wealth funds and pension schemes. These funds have helped to back renewal projects, wind power and bio-energy.

But an issue is that the bank has restrictions on access to the money markets, and the Government believes that the sell-off will open the doors to more capital that can be loaned to a broader set of sustainable projects.

Critics, however, argue that the sale could well damage the progress towards a low-carbon economy. Caroline Lucas, Green MP for Brighton Pavilion, said the plan was rash and irresponsible.

She argues:

“The government should keep at least a majority stake in the Green Investment Bank to ensure investor confidence is upheld and the commitment to low-carbon lending remains.”

Climate change focus

There was an echo of the concerns in the latest report from the Committee on Climate Change just published that urges the Government to extend funding for low carbon electricity generation to 2025 to meet emissions targets.

The 2050 emissions target is a very tough reduction of at least 80% from 1990 levels.
We wholeheartedly support the committee in advising the government to agree on an action plan that truly delivers low carbon heat and energy efficiency.

The committee is keen that the government should make this a reality by backing investment and innovation that will cuts costs.

Committee chairman Lord Deben argues: “This government has a unique opportunity to shape climate policy through the 2020s. It must act now to set out how it plans to keep the UK on track. Acting early will help to reduce costs to households, business and the Exchequer.”

This does require a hands-on approach, which might go against the “let it be, let it grow” mindset that pervades Government thinking. We need a strong lead and guide to ensure people feel confident in investing in sustainable solutions that save energy while cutting carbon emissions – and reduce utility bills.



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